A bill passed by the US Senate last week restricting federal government contractors from outsourcing work overseas is unlikely to have a significant impact on India's software and services companies, according to an executive of the National Association of Software and Service Companies (Nasscom) in Delhi.
"The business impact of such a move on the Indian IT industry will be very small, as the share of US federal government contracts in exports of IT software and services from India is less than 2%," said Nascom president Kiran Karnik.
However, the bill is not in keeping with the increasing globalisation of trade, which benefits all countries and is contrary to the spirit of free trade being promoted by the World Trade Organization, he said.
Analysts said the restriction on outsourcing proposed by the bill affects only the departments of treasury and transportation and related government agencies. The restriction is valid until the end of September, although the analysts warned that in the run-up to elections in the US, similar and stronger legislation is likely.
A number of US states are also considering bills restricting where work outsourced by the state government can be done.
John Ribeiro writes for IDG News Service